Gold drops Rs3,500/tola as dollar strengthens

Bullion slides over 1% globally; rupee holds ground at 280.87/$

KARACHI:

Gold prices in Pakistan fell on Tuesday, mirroring the decline in international bullion rates as the US dollar surged to a three-month high and investors awaited key US economic data for cues on the Federal Reserve's monetary policy direction.

According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of gold dropped by Rs3,500 per tola to settle at Rs420,362, while the rate for 10 grams decreased by Rs3,001 to Rs360,392. A day earlier, gold prices had risen by Rs1,300 per tola to close at Rs423,862.

Commenting on the trend, Adnan Agar, Director at Interactive Commodities, said the market was undergoing a downward correction. "Gold has come down; its high was $4,000 and the low was $3,928, with the market later at $3,953. The strongest support lies at $3,914. If this level breaks, the market could move towards $3,850 and $3,800, from where a rebound of $150-200 or more is possible," he noted, adding that the outlook remained bearish in the short term.

In the global market, spot gold fell over 1% as the strengthening dollar weighed on investor sentiment, while traders continued to assess the timing of possible US interest rate adjustments.

Spot gold was down 1.1% to $3,959.56 as of 10:54 am EST (1554 GMT), according to Reuters. US gold futures for December delivery eased 1.1% to $3,968.10. The dollar index traded at three-month highs, making gold more expensive for other currency holders.

Although the US central bank cut rates last week, Fed Chair Jerome Powell suggested the reduction in borrowing costs might be the last of the year. Traders now see a 71% chance of rate cut at the Fed's December 9-10 meeting, compared with more than 90% a week earlier, CME Group's FedWatch tool showed.

The Pakistani rupee inched up 0.01% on Tuesday, closing at 280.87 against the US dollar compared to 280.90 a day earlier. According to Ismail Iqbal Securities, the rupee has depreciated 0.83% in calendar year to date but appreciated 1.03% in financial year to date, reflecting overall stability in the inter-bank market.